German Chancellor Angela Merkel said yesterday Europe would impose tougher sanctions on Russia next week if there was no sign Moscow is willing to engage in a "contact group" to seek a diplomatic solution for Ukraine.

Western powers have been increasing the diplomatic pressure on Moscow ahead of a weekend referendum in Ukraine's Crimea region on whether to join Russia.

The leaders of the G7 - the United States, Britain, France, Germany, Italy, Japan and Canada - called on Moscow to stop the referendum from taking place and said they would not recognise the outcome if it did.

"In addition to its impact on the unity, sovereignty and territorial integrity of Ukraine, the annexation of Crimea could have grave implications for the legal order that protects the unity and sovereignty of all states," they said.

On a visit to Warsaw, Merkel warned of new sanctions.

"Almost a week ago, we said if that wasn't successful within a few days we'd have to consider a second stage of sanctions," she said. "Six days have gone by ... and we have to recognise, even though we'll continue our efforts to form a contact group, that we haven't made any progress."

If no progress is made by Monday, EU foreign ministers will impose sanctions such as visa bans and asset freezes on those responsible for Russia's actions against Ukraine and EU leaders will discuss this at their summit next Thursday, Merkel said.

Merkel and Polish Prime Minister Donald Tusk also said EU leaders were eager to sign a political association agreement with Ukraine's pro-Western government at next week's summit.

Amid a flurry of diplomacy, US Secretary of State John Kerry said he would travel to London to meet Russian Foreign Minister Sergey Lavrov tomorrow in a last-ditch bid to avert a new crisis over Ukraine.

Kerry told Congress yesterday he would make the trip to try to calm rising East-West tensions.

Sunday's referendum in the largely pro-Moscow peninsula is widely expected to endorse its secession from Ukraine. Western powers say they won't recognise the referendum because it violates Ukraine's constitution. Russia maintains it is a legitimate expression of the Crimean people's desire for self-determination.

The foreign and defence ministers of France will also visit Moscow on Tuesday, the Kremlin said yesterday after a telephone call between presidents Vladimir Putin and Francois Hollande.

Putin and Hollande discussed "possibilities for stepping up international support" for a solution to the crisis in Ukraine, the Kremlin said.

The tone of the Kremlin statement differed from one from Hollande's office, which said Hollande told Putin he must do everything to stop the "unacceptable annexation" of Ukraine's Crimea region by Russia.

The proposed EU sanctions are being co-ordinated with the US, Switzerland, Turkey, Japan and Canada.

Alexei Pouchkov, chairman of the foreign affairs committee in the Duma, the lower house of Russia's parliament, said Moscow would hit back at any sanctions "with the same measures".

This would amount to "an unprecedented freezing of inter-parliamentary relations" and would interfere with the work of international organisations such as the Council of Europe and the Organisation for Security and Co-operation in Europe.

"It would be worse than during the Cold War," he said.

This article appeared in the South China Morning Post print edition as Merkel delivers Russian sanctions ultimatum